Approach Twistee Treat Corp. with caution -- not when buying the company's ice cream, but when buying its stock, according to Lowe Investment & Financial Letter, a financial newsletter based in Jersey City, N.J.

An inability to open enough stores to make a profit or break even has been the company's main problem, editor Christopher Lowe writes. Bureaucratic snafus in obtaining zoning, construction and operating permits have delayed expansion. Meanwhile, the company prepared its staff to support hundreds of stores and purchased a $600,000 headquarters.

Twistee Treat's management has initiated changes that could help the company survive, Lowe states. ''Its new plan of operation will either make or break the company. The company already has slashed overhead and more cuts are coming.''

Twistee Treat, based in North Fort Myers, has about 35 ice cream shops in Florida. The shops are built in the shape of ice-cream cones. Locations include DeLand, Lakeland, Ocoee and Orlando.

To increase its revenue and, more importantly, to make a profit, Twistee Treat has decided to sell its ice cream and equipment to restaurants, Lowe reports. In an experiment, some Hardee's hamburger restaurants are selling Twistee Treat ice cream. H.P. Hood, a dairy, also will distribute and sell the company's products.

Twistee Treat makes ''firm-serve'' ice cream, which has the quality of hard ice cream but can be dispensed from a soft-serve ice-cream machine. The company also makes a low-calorie, non-dairy, fruit-based ice cream.

To reduce its financing costs, Twistee Treat will sell rather than lease stores and equipment to franchisees, Lowe writes. The company also will seek joint ventures.

For example, the company recently received $1 million from a real estate developer who plans to build 180 stores in the New York area, Lowe reports. The developer will finance the building of the stores, and Twistee Treat eventually will sell ice cream and equipment to them.

The new plans could help the company reverse its losses, which Lowe describes as ''out of control.'' Investors should not buy Twistee Treat stock, he recommends. On the other hand, investors who own the stock should not sell it yet, he advises.

''Although we believe in management, their new plan of operation and believe the company can be built into a major company, we want to see the price of Twistee's stock stabilize before advising the purchase of additional shares'' Lowe writes. ''Twistee is a high-risk situation.''

The company plans to sell stock in January to raise money for paying debt, buying equipment, marketing and other expenses. The company plans to sell 1 million units, each consisting of three shares of stock and two warrants, which are rights to buy stock.

Lowe estimates that the units will cost $8 each based on the company's currently low stock price of $2.62 a share. If so, the company could raise about $8 million. ''The failure of this offering would place the company in jeapordy,'' he warns.

Twistee Treat's prospectus, which describes the stock sale to the Securities and Exchange Commission, is loaded with descriptions of risk. Among them are: limited revenues, losses, competition, difficulty obtaining sites and building permits, government regulation, refundable franchise deposits, no dividends and possible need for additional financing.